The giant Kazakh Tengiz oilfield—home to an estimated 9 billion barrels of recoverable oil—is set to get a major boost with plans by Chevron Corp. and partners to invest another US$37 billion in the field’s expansion.
On Wednesday, the Kazakh oil minister lauded the investment agreement on behalf of Chevron and its partners, which comes at a time when the oil price crunch has most unwilling to put out this much cash.
According to the Wall Street Journal, Chevron and partners would begin the investment already next year.
The new investment doubles what they’ve already spent on this giant field. Related: Wells Fargo Reduces 66% of Credit Lines to Oil and Gas Players
Tengiz was discovered in 1979 and is said to have recoverable estimated reserves of 6-9 billion barrels. The fields development began in 1993 under a 40-year joint venture between Chevron, with a 50-percent interest, ExxonMobil, with a 25-percent interest, and KazMunaiGaz, with a 20-percent interest. Chevron is the operator of the field through a 50-percent interest in Tengizchevroil (TCO).
This is the deepest operating oilfield, with a 12,000-foot deep reservoir.
Chevron is a shareholder in another large Kazakh oilfield, Karachaganak. It also has a share in the Caspian Pipeline Consortium.
Chevron is the largest private oil producer in Kazakhstan, and Tengiz will be one of its key crude output growth facilitators in the coming years. Related: Why Did Saudi Arabia Kill OPEC?
This investment is one of the first major investments in new production since oil prices started to slump in mid-2014.
At the same time, all is not well in Kazakhstan, as Reuters reports an ongoing dispute between the government and major producers over the development of the Karachaganak gas condensate field.
The Kazakh Energy Ministry is now signaling that it may resort to arbitration to resolve the US$1.6-billion dispute over various parties’ shares in the field’s output, which is supposed to be in the neighborhood of 1 million tons of oil this year, with commercial output set to begin in the third quarter. The project is led by BG Group (now acquired by Shell) and Italian Eni. Kazakhstan in April filed a US$1.60-billion claim against the consortium. Chevron owns an 18-percent share.
By James Burgess of Oilprice.com
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